This whole LIV scene reminds me of South Park’s Panty Gnomes.
The gnomes had a business plan. Step 1 was collecting the underwear. Step 3 was profit.
Step 2? They weren’t sure yet. Rest assured that meetings would be called and committees formed to discover an answer.
LIV has collected golfers and titles. Hey, Step 1 is already done!
They want to be profitable. A real golf league and a functioning business now that the Saudi Public Investment Fund is no longer financing them. This is step 3.
Step 2 remains a question mark – but they have a concept of a plan.
LIV is trying to raise $250 million
According to a report by Dan Primack at AxiosLIV Golf is looking to raise $250 million from new investors to save the league.
League, which has lost several billion dollars from the start in 2022, it claims it can reach profitability in just 20 months should get $250 million.
If that doesn’t materialize and LIV only collects, say, $170 million, the league will apparently rely on “increased team values ​​and a new media rights deal” in order to break even.
Now, let’s break this down to common sense.
LIV has four years of unrestricted funding. Of course, you wouldn’t expect any startup to be profitable in the short term, but the league never showed any reasonable signs of growth that would lead you to believe it could be profitable. despite a bottomless wallet.
And before the Saudis left, LIV CEO Scott O’Neil said the league was five to 10 years away from profitability. This was with infinite money. Now they are 20 months away from profitability on a shoestring budget?
TV ratings? Never over 500,000 for any US round
A media rights deal? Revenue from the Fox Sports partnership is described as “nominal,” so it’s not exactly the $700 million deal the PGA Tour has.
Corporate sponsorship? A drop in the bucket from some brands like Rolex, but it’s very limited.
I mean, what part of this effort has been even remotely successful from a business standpoint? The Australian and South African events were well attended, but the corporate money for golf tournaments is in the US. The DP World Tour would be much more stable and profitable if it weren’t for that.
Even if LIV can raise $250 million in funding — and it’s certainly possible that someone out there is desperate or naive enough to throw that kind of money at it — I’m highly skeptical that it will be profitable anytime soon.
They will have to pay more than 250 million dollars only to bring back Bryson DeChambeau. Love him or hate him, he’s the biggest draw for LIV.
How does this make any business sense?
And franchise values? I will admit that some of the superstar-led teams have something of a new brand because of the players attached to them—such as DeChambeau with the Crushers—but who the hell cares about the Cleeks or the Southern Guard? I think the D-III college away from me has a better chance of forming a meaningful brand.
What are the chances of LIV staying alive?
There are some tough guys in the LIV stable and billionaires investing in the sport is definitely hot right now.
But one thing must be made clear here: LIV’s survival will rest entirely on its ability to secure a new media rights deal once the modest deal with Fox Sports ends (the exact terms of the deal were not disclosed, but LIV is currently in the second year of this partnership).
You can raise money and the league can maybe stay alive until 2027, but there will be no money to play with unless the rights deal makes sense. Media rights are the financial source of any sports league.
It is fair to say that corporate sponsors may become more interested now that LIV is not associated with Saudi Arabia. There might be an opportunity there.
At the same time, it seems inevitable that purses will drop significantly from the $30 million they’re currently playing for. Top talent won’t stand for it.
Can LIV survive? I highly doubt it. Mathematics is not mathematics.
What do you think? Let me know in the comments below.
Main photo caption: Lucas Herbert is sprayed with champagne after winning LIV Virginia. (GETTY IMAGES/Tasos Katopodis)
